How to Get Private Lenders & Lines of Credit to Fund Your Business

Every real estate investor with half a brain, knew that when the banks started giving out ARM’s (adjustable rate mortgages) like candy, somebody was going to have to pay the piper someday.  Well that day has come!

But instead lambasting the banks who are now causing some much suffering throughout the economy, the Feds and Congress are devising “bail out” plans. Never mind the strapped homeowners who banks refuse to do workouts for… Nevermind the investors who can’t get lines of credit or investor home loans because of “tightened” credit requirements.

Just read the following sweet deal that the 2 largest mortgage lenders are getting, even though they’re losing massive amounts of money, and the equity from their stock price is in the toilet:

“The Fed said it granted the Federal Reserve Bank of New York authority to lend to the two companies “should such lending prove necessary.” They would pay 2.25 percent for any borrowed funds — the same rate given to commercial banks and big Wall Street firms.
The Fed said this should help the companies’ ability to “promote the availability of home mortgage credit during a period of stress in financial markets.”

Secretary Henry Paulson said the Treasury is seeking expedited authority from Congress to expand its current line of credit to the two companies and buy shares of the companies — if needed.”

Do you think maybe these institutions could extend investors (who really are the creative engines in the real estate market) increased lines of credit at lower interest rates?

Especially since real estate is really a good deal now for those who know how to choose wisely.  If you’d like to start choosing more wisely, and be able to convince private lenders of that fact, you should check out my Expert System called the Deal Evaluation Tool.  In not only precisely calculates your profit and income for 10 years down the road, it also quantifies the risk so you know what to avoid, BEFORE you sign the contract!

Posted to Business Lines of Credit, Commercial Lending, Institutional Lending, Money & the World, Private Lending
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I my experience, most investors feel about business plans the way many people feel about exercise.  They know it’s really good for them, but they just can’t find the time to get around to it.  Other things always seem to come up. 

Now, you probably know the saying (and the truth) that “if you fail to plan, you plan to fail.”  I know I’m preaching to the chior, but let me give you some other reasons why a business plan can boost your success in obtaining large sums of money from private lenders:

1. Having a well-thought out business plan, is a powerful and positive marketing document for sophisticated and wealthy private lenders and angel investors. 

2. Your business plan will enormously boost your credibility with private lenders (even friends and family)

Let me explain. 

Most most investors get into real estate, strongly motivated to be working for themselves and achieving financial freedom.  And my guess is that even if you have a company (and you should), it’s really a one-man (or one woman) show.  Sure, you may use an attorney to close, but it’s pretty much you. 

That may be great for you, but scares the heck out of private investors.  Why? because they are used to evaluating Companies, as investment prospects.  A company is an entity that is not dependent on one individual.  If the individual gets sick or goes on vacation, the company’s business continues, and doesn’t put the investment at risk.  Having a business plan that shows you have or are building a strong organization that knows where it’s going is a major factor in addressing that concern.

In fact, all of the sophisticated and wealthy private investors that I know, expect to see a business plan to evaluate an investment. 

As a marketing tool, a business plan will help you create your story that will attract the interest of private lenders.  In fact, having a “good story” is absolutely essential if you want to be successful in raising private money.

I know that sitting down to write a business plan is a daunting prospect.  Would having a template to follow, and even being able to get a plan written for you be of interest?  If so, you are invited to join our inner circle where we have a whole training session on just this topic.

Posted to Angel Investors, High Net Worth Lenders, Million Dollar Slush Fund, Private Lending, SEC, Uncategorized
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I was forwarded an email the other day, that was apparently sent by Delta, and United (at least) to airline customers complaining about the high price of fuel and blaming the “speculators” for driving up prices, and urging the recipients to support “regulatory limits” (whatever that means).

This has got to be the stupidest, most hypocritical and whiny communication I’ve ever seen from a public corporation. 

Why is it stupid?  Because we live in a free market economy.  Without it there’d be no Delta or United Airlines, nor any of our blessed prosperity.  For these products of the American Free Market economy to complain about the free trading of oil as a commodity is ridiculous.  By their reasoning we should also have “regulatory limits” on gold, platinum, cocoa, pork bellies, orange juice, sugar cane and a hundred other items that are traded on the commodities exchanges.

And, oh yes, how is anyone, even the US going to regulate a commodity that is traded world wide?–Artificially impose a price control?  No one will sell us oil–obviously not a solution.

Why are the airlines hypocritical.  Because I bet that the airlines themselves buy and sell oil futures.  Just like farmers buy and sell corn and wheat futures.  Heck, if fuel were so important to my business, that’s what I’d do.   So what are they whining about?  Did they make a bad commodity play?

Aside from all this silliness, there is a fundamental truth that every successful entrepreneur should hold to.   Do not speak or think in ways that disparage money–like profits made by smart investors (who are no more speculators than anyone who buys a stock hoping it will go up).  If you express, envy, or anger at financial success of anyone, all you’ll accomplish is to chase money out of your life. Just look at Delta!

If Delta, decided to take an entrepreneurial approach, they’d be examining their business model to make it more competitive with the leading airlines, and raise ticket prices if necessary.  Why don’t they raise their price?  The only reason I can think of is that other airlines that operate more efficiently will take business away because they don’t have to raise prices.  That’s called competition. 

In dictatorships like China, they can just raise prices without improving service, efficiency or anything else.  If that’s what Delta needs, they should move to China.  Otherwise, they should get a grip, and take care of their business and stop whining to the public–it’s appalling and insulting.

Posted to Money & the World
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You know what really stops real estate investors from making a fortune.  It’s not finding most of the funding for a deal–it’s finding that last bit.  For example, almost anybody can get an 80% LTV mortgage.  But the next 20%–there’s the rub. 

Oh and you “subject to” investors where the seller is giving you their house or apartment?  Isn’t it true that more often then not, there’s additional cash required for mortgage arrearage the seller left you with, or minor (sometimes major) repairs, other liens, marketing expenses, etc?  You can easily go broke doing subject to deals without an additional source of money.

There are actually quite a few other sources of money, and they work quite well with primary funding strategies like institutional loans.  I call it, the multiple funding strategy.  These days with credit tighting, institutions lowering the loan to value ratios they’ll fund, and looking for more security from the investor, a multiple funding strategy is practically a necessity.

This is an especially good strategy to use with private lenders who expect a high return on their investment (20%+).  Just do the math.  If you use an investor’s money to buy a house worth $200,000.   And let’s say you end up paying $160,000 for acquisition, repairs, etc.  You put a tenant in the house for 3 years on a lease option which the tenant exercises for $230,000.

Okay, your profit is approx $70,000.  However, if your investor put up the entire $160,000, what’s his return if you gave him the entire profit?  It’s about 44%–that’s over 3 years.  The investor’s annual return is only 14.5%.  If the investor expected 20%, he’d be pretty disappointed.

And what do you get in this scenario?  Just the cashflow from the property.  Now with no mortgage, let’s say that’s about $1000/mo.  You net $36,000.   However, if you owed the investor the 20%/y interest, $26K would come out of your share to the investor, netting you only $10,000.

Now compare the same scenario with getting an 80% institutional loan at 7% for the $160,000 purchase price.  Now, you’d only have to borrow $32,000 from the investor.  3 years at 20% would amount to $19,200.  The investor is happy, and you’d net $50,800, plus the net cashflow from the property!

Which scenario would you prefer?

By the way, if you want to know how to fund every deal you do, I’ve created the absolute best and most comprehensive funding manual you will ever see called “Show Me the Money“.  It contains step by step instructions on how to get money from private lenders, high net worth individuals, lines of credit, financial institutions, buyers, sellers, notes, and much, much more.   And, it’s a ridiculously low investment (for now!).  Click here and Get in NOW.

Posted to Business Lines of Credit, Institutional Lending, Multiple Funding Strategy, Nothing Down, Private Lending
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I’ve gotten a number of comments about my “Show Me the Money” Manual.  And I wanted to take the opportunity here to respond to them.

First of all, this manual is not just for experienced investors.  In fact, most of the techniques I teach in the manual work great even if you are a rank beginner.  For example, buyer and seller financing, private lending with family and friends, unsecured business lines of credit, equity exchange… In fact the only areas where a beginner will have a significant learning curve is with commercial loans, and million dollar funding.

Secondly, don’t let the low price decieve you.  This is not just a teaser, that requires you to buy something else, in order to do anything worthwhile.  Anybody, can follow the procedures I describe and be successful in having funds for real estate purchases.

So, if you want to own this one-of-a-kind deal funding manual, click on the “Show Me the Money” icon on this page or Use This Link Now.

For beginners with good credit I recommend you Immediately read the chapter on getting unsecured business lines of credit, and take action.  You could have access to hundreds of thousands of dollars in a matter of months.

Posted to Business Lines of Credit, Buyer Financing, Friends & Family, Private Lending
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Today is the 4th of July.  I love this country because it offers more opportunity for anyone to fulfill their dreams than any place on earth.  And that goes for getting the money from private lenders or other funding sources (of which there are many).  Yet many investors find funding the major challenge to success in their real estate investing business.

Let me give you a tip–I call it the ‘Trust Factor’.  A saying I’ve learned from my Angel Investor acquaintances is “Bet on the Jockey, not the horse.”  This means that when a potential private lender is considering a new investment, the people involved in the venture are a major focus.  That means you and your team.

My 2 yr old granddaughter has taught me a profound insight about trust.  She believes everything her Mama, Nana and Pa (that’s me) tells her.  Why? Because she totally trusts us and we always tell her the truth and do what we say we’re going to do.

And aren’t those the characteristics of people that we trust in our life.  So, if you tell a potential client or lender that you’ll call them tomorrow, make sure that you do, rather than calling later with an excuse.  If you tell a loan officer that you’ll have the paperwork for them on Wednesday, make sure you do, and that the package is complete!  Same goes for making payments on-time (or early), and so forth.

The interesting thing is that when you do this consistently, you train other people to treat you the same way–just like my granddaughter.  And it’s such an easy thing to do–anybody is capable of it.  Make it one of your principles.

By the way, if you want to learn the other 4 characteristics for private lending success, I’ve created the absolute best and most comprehensive funding manual you will ever see called “Show Me the Money“.  It contains step by step instructions on how to get money from private lenders, high net worth individuals, lines of credit, financial institutions, buyers, sellers, notes, and much, much more.   And, it’s a ridiculously low investment (for now!).  Click here and Get in NOW.

Posted to Institutional Lending, Million Dollar Slush Fund, Private Lending
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I was reading an article on senior housing.  The slow housing market has delayed the plans of seniors who want to move to an independent-type retirement community but who can’t sell their homes. It’s not so great an issue for senior care facilities since the move to them is more out of necessity.

Now, what about your buyer?  Does he or she have to sell their house in order to buy yours?  If you have a financing contingency in your purchase and sale agreement, you are opening yourself up to be held hostage by the entire housing market. This is not smart.  Instead you should charge an earnest money fee equal to the amount to cover your payments and then some over the time of the contract.  And you hold the earnest money!

However, because of the tightening of the credit markets, foreclosures and the general decline in home values, you need to have your exit strategy (the one that will make you money, despite the challenges), BEFORE you buy.  It could be flipping to other investors, offering owner financing, down payment assistance, rental, etc.  Whatever you do, make sure you have realistic (below market) numbers for rent or sale prices, and realistic holding times.  If you still calculate your makiig a profit, go for it.  If not, renegotiate terms, or pass.

Remember one bad deal can negate the profit from 5 good deals, or take you out of the game entirely.  So, don’t let anxiety or greed motivate you to make risky choices.  Believe me, it is not worth it.

If you want to learn all of our strategies for dealing with buyers (or renters) including finding them, negotiating and funding them, you need to join our Foreclosure Millionaire Club.  You can try it for just a buck.  Click here to Join.

Posted to Buyer Financing, Institutional Lending, Uncategorized
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So with all the negative media about real estate, how do you convince a potential private lender, that his or her money is safe being invested with you?

First, the “good news” is that people don’t have any good alternatives for investing their money right now.  The stock market is very volatile, and has been performing poorly for quite a while.  Start up companies are as risky as they’ve ever been.

In fact, it is really a good time to buy real estate because prices are depressed and sellers are motivated.  However, how do you convince your potential investors that their money is safe with you and things won’t get worse.

Here’s something to consider: What if you could show your investor that you had an objective means of evaluating properties such that you could show them, that even if things got worse, they’d still make a profit?

That would certainly set you apart from the crowd, and make your appeal more convincing.  Fortunately, there is such a tool, that I’ve created and that we use in all of our real estate deals.  It’s called the Deal Evaluation Tool.  It’s basically an expert system that analysis the financial returns and quantifies the financial risk of any kind of real estate transaction, with any kind of terms.

I personally think that no investor “should leave home without it”.  With proper due diligence, and this expert system, you being doing killer deals in any kind of market, every time.  Check it out yourself by using this link.

Posted to Angel Investors, Friends & Family, High Net Worth Lenders, Marketing in Real Estate, Private Lending
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Sherril wrote a comment on my previous article of “private lending - the best times are the worst times”, saying that us investors will just have to wait until the market becomes more positive.  Well,
I don’t like the idea of waiting til the market does something.  Rather let’s respond creatively to the current market negativity to make some money.

First, let’s recognize that the truth is that home values a falling in many areas of the country.  This is definitely not good for people who want to sell their home.  Despite the fact that this particular downturn has been triggered by the adjustable mortgage debacle, it is really just part of the cycle of real estate values that occurs with a period of 8-15 years.  We’ve been in a up cycle so long, most investors haven’t a experienced a down period.  And values will eventually come up again.

But what is the investor supposed to do now?  First, let’s go back to the first principle I believe every investor should live by: “You make your money when you buy”  This means that your profit is built into the price and terms of the offer your willing to accept.

For example, if you are flipping houses, start with the calculation of what your investor buyers are willing to pay for these properties.  It may still be 70% of after repair value (ARV) - repairs, but what is the percieved ARV? 

In a falling market comps are deceptive.  They are a backward looking measure of value, of people were paying for similar properties 6 mos to 1 year ago.  The trick is to be able to project with some safety margin how low the price will be 6 mos to a year from now!    In some places the depreciation rate is 5%.  The percieved depreciation rate of your potential buyers may be higher.  And that’s the real value of the ARV.

Start with that value, factor in your costs and profit, and you’ll get the maximum about you can offer to pay your seller. 

By the way, if you want to know how to fund every deal you do, I’ve created the absolute best and most comprehensive funding manual you will ever see called “Show Me the Money“.  It contains step by step instructions on how to get money from private lenders, high net worth individuals, lines of credit, financial institutions, buyers, sellers, notes, and much, much more.   And, it’s a ridiculously low investment (for now!).  Click here and Get in NOW.

Posted to Buyer Financing, Marketing in Real Estate, Uncategorized
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Real estate is a great investment, right? And a lot of investors I know are making a killing.  So, why all the negative press?  The answer is very important to you, because your potential private lenders are reading and watching this very same media, and thinking it’s a smart move Not to invest in real estate.

Well, first of all, the press is partially right–real estate values are falling in many (but not all) parts of the country.  And people with ARM mortgages are getting foreclosed on right and left!  In 2007, Atlanta had over 70,000 foreclosures!  And, of course, this whole crisis was brought on by greed.  Greed of the banks and mortgage brokers that qualified people for mortgages they couldn’t possibly afford once the rates re-adjusted. 

And now, in a move that gives hipocracy a whole new meaning, the banks are tut-tutting over the “shock” and tightening credit so it’s even harder for legitimate borrowers to buy property.  This is really bad news for many sellers, because with fewer buyers and more foreclosures, prices are being driven south.

And this is what the public and your potential private lenders hear about.  However, the other side of the story.  It’s a great buyer’s market where you can pick up property at huge discounts.  And this has to be the core of the story you tell your private lenders. 

Now, you also need to provide a story about how you’re going to protect their money from all the negative news and other things that might happen.  So, when you tell them you can get property at a deep discount, let’s be clear about what price is a “discount”.  First, a discount does not mean, a price lower than it used to be a year ago.  A discount means a price very much lower than the current market value.  In other words, a price below what the house would sell instantly by any qualified buyer where you would still make a hefty profit after paying off your loans and your investors.  This is what I call, “making your money when you buy!”

In other words, your acquiring property for an amount that even if things didn’t go as planned you’d still come out ahead.  If you don’t know how to figure that, you really should own my Deal Evaluation Tool.  It’s an expert system that will perform the “what if” calculations for you and give you a thumbs up or a thumbs down on any real estate purchase.  I wouldn’t consider any property without it!

Posted to Angel Investors, Friends & Family, High Net Worth Lenders, Private Lending
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